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Q: "A poorly performing employee has offered to resign if we give him a good reference. Would it be safe to do this?"
A: This would be dangerous. If you provide a reference you should not mislead the reader either with what you put in or what you leave out. If the employee secures another job on the basis of a reference in which you fail to refer to his performance and he performs badly, the new employee would have grounds to sue you for damages. Talk to the man and try to determine the reason for his poor performance. Is it a question of "won't do" or "can't do"? If the former, use your disciplinary procedure to encourage him to improve. If the latter, try to raise his performance level, for example by training, failing which try to find him a job that he can do well. If he wishes to resign, so be it, but do not give a false reference.
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